Velocity Midstream signs agreement with Shell Western E&P for services

Velocity Midstream Partners LLC has secured long-term commitments from Shell Western E&P for transportation and terminal services for Shell’s light oil and condensate production from the Harrison Ranch (also known as the Piloncillo Ranch) in Webb and Dimmit counties, Texas.

Shell has significant long-term development plans for its 100,000-plus contiguous acreage position, which lies in the liquids-rich window of the Eagle Ford Shale. Velocity has begun construction on the 12-inch Gardendale Pipeline, which will transport product through Webb, Dimmit, and La Salle counties, terminating at Velocity’s Gardendale Hub near Gardendale TX. The Gardendale Pipeline and Hub are scheduled to be operational in autumn 2011.

The Gardendale Pipeline will gather and transport a rapidly growing volume of light oil and condensate from several large producers and deliver that production to Velocity’s Gardendale Terminal. The Gardendale Terminal and Hub will have 100,000-plus barrels of initial storage and will provide access to downstream take-away pipelines, truck loading and unloading facilities, as well as US Development Group’s rail loading facilities adjacent to Velocity’s terminal. The Gardendale Pipeline will also serve as an extension of Velocity’s Catarina Pipeline and Terminal facilities in Catarina TX, which were established to provide transportation and terminal services to several large producers in the area. The Catarina system has been in operation since February 2011.

At the Gardendale Terminal, Velocity is formalizing interconnection agreements with several downstream pipelines including Enterprise Products Partners LP and Plains All American Pipeline LP. Enterprise recently announced an extension of its Eagle Ford Shale crude oil pipeline system, which offers access to Cushing and the Houston area refining complex. Plains has announced a commitment to construct a crude oil and condensate pipeline from the western region of the Eagle Ford Shale to a marine terminal facility in Corpus Christi TX.

Velocity is completing terms with several actively drilling producers regarding gathering and transportation pipelines serving the Eagle Ford Shale’s lower API gravity oil window. Velocity plans to build its Eagle Eye oil pipeline both west and east of the Gardendale Hub. With these commitments, these oil pipeline projects will also be in service this year, soon after the Gardendale Hub becomes operational.

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